he Vol 3: June 2009 Large Taxpayers Office NEWS DESK In This Issue The launch of PAYE e-filing brings to actions necessary to counter such four the number of tax filing service risks. menus available electronically. Other • Online services brief modules launched include e- The Authority also plans to further registration and e-filing for normal consolidate operations by strengthen- • Corporate Plan and withholding VAT. ing regional offices with the eventual • EA tax harmonization aim to segment tax administration Arrangements for the launch of e- based on regions. This move may see • Technical briefs filing for annual income tax returns traditional revenue departments are at advanced stage and pilot test- replaced with region based structures ing has commenced with up to 130 with the head office playing a largely KRA staff members having filed supportive policy making and monitor- their 2008 returns electronically. ing role. Online services The envisaged June 09 roll out date will however not be achieved as more The proposals contained within the testing is needed before the system 4th Corporate Plan serve to underline Following the publishing of the is opened up for public use. Taxpay- the now clear reality that for the KRA, Finance Bill 2009, work has already ers are therefore advised to file the change and more change seems to have commenced to develop regulations annual returns in the normal manner. become the key constant. to entrench the requirement for electronic filing of returns. The proposed framework aims to require 4th Corporate Plan East Africa tax harmonization specified categories of taxpayers to Work to conclude the 4th Corporate The East African Community (EAC) file returns electronically with Plan is in high gear with its unveilingSecretariat with the assistance of the appropriate safeguards provided to expected later this month. The 3-year GTZ has commenced a study to mitigate against data interception, plan seeks to deepen the reform develop a framework for harmonisa- penalties occasioned by system and culture with a number of initiatives tion of Domestic Taxes within East other failures on the KRA side. It is geared towards re-engineering of Africa. The harmonisation of Domestic expected that the rules will be pub- technological and structural processes Taxes is anchored within Article 83 of lished in July 2009 to take effect and further enhancement of human the EAC treaty which binds the Part- within a period not exceeding ninety resource capability. ner States to take measures to harmo- days. nize tax practices in order to improve A key focus of the plan is the the business environment within the Additionally, a new milestone is entrenchment of the functional envisaged Common Market. about to be covered with the organisational structure with plans to planned roll out of online filing integrate crucial processes such as Among the issues being considered services for PAYE with effect from audit and risk management with a view include the priority areas and the 1st July 2009. In June, twelve tax- to better achieving the “single view” approach to harmonisation with a payers successfully filed their May concept. In respect of the latter, the choice between separate and unified 09 returns using the recently KRA plans to establish a formal tax legislation. A team of consultants has launched PAYE filing module with risk management role to spearhead already commenced the information more testing planned within the the study of risks inherent in tax collation process with the Kenyan visit month. collection processes and the response News Desk Contd. on back page NEWS DESK (Contd.) targeting key players including Trea- give the system satellite capability so as Revenue Authorities meet sury, KRA, AG‛s department and to facilitate real time tracking including business associations. carriers that deviate from the planned The 26th East African Revenue route. Authorities meeting held in Nairobi The EAC Common Market is The Customs department commenced use in May discussed the intractable expected to come into effect in 2010 of the system for all transit fuel carri- question of cross border smuggling with its formal launch by the Heads ers and motor units with effect from 9th and mechanisms for tackling the of State slated for later this year. February 2009. menace especially in respect of motor vehicles, spirits and petro- Cargo tracking Top 25 sector group leum. The meeting attended by Rwanda, Tanzania, Uganda and E-cargo tracking for domestic taxes In a bid to improve customer service, the Kenya resolved to cooperation has commenced with the initial pilot LTO has further segmented its taxpay- efforts and to seek greater targeting four (4) companies ers with the creation of a Top 25 group rapport with the EAC secretariat involved in exportation business. A comprising of the largest contributors to with a view to better the tax sensitisation session was held on tax revenue. This cream of the cream reform agenda within the Commu- 17th April 2009 at which taxpayers consists of taxpayers from varied indus- nity structure. were taken through operational try sectors including state corporations modalities of the system which but excluding government ministries. In The meeting also deferred a deci- apart from cargo tracking will also total the group contributes 52.5 % of sion on a proposal by the mobile help track the KRA‛s widely the LTO‛s revenue with the figures for telephone industry to operate a dispersed fleet of vehicles. main tax heads being .PAYE (30.09%), prepaid airtime scheme that would %), Other Income Taxes (22.73%) and see tax on airtime sold in one coun- The system which operates through VAT (28.19%). try but used in another transferred wireless technology operates via an to the country where the service electronic tag that transmits signals Details regarding the new group whose was consumed. This matter was that get picked up by readers placed contact manager is Mr. Ronald Omulindi referred to the joint technical at strategic points thereby helping at Tel: 20 2816117 or committee for evaluation of its pinpoint the locality of the carrier. Ronald.Omulindi@kra.go.ke are available feasibility given existing legal Upgrades being undertaken aim to at www.kra.go.ke/lto/top_25.pdf. provisions NOTICE BOARD TECHNICAL DESK Auditors Returns TECHNICAL MATTERS We wish to inform taxpayers that the Technical Rulings requirement for their auditors to file monthly data on VAT refund claims Excise Duty Non-Residential Buildings audited by them is now entrenched in Point at issue law. As with past practice, no refund Point at issue claims will be entertained unless an What is the tax point for excise tax Whether a person registered to auditor has submitted the relevant purposes and how is excisable value supply leasing, letting or hiring of return covering the refund claim(s) in determined? non-residential building should be question. taxed on the area occupied by him in We therefore urge taxpayers to ensure Ruling a self-owned building. that their auditors comply by providing the information required in good time. The tax point is that at which the Ruling Auditors who consistently fail to customer takes possession and title observe this requirement will face to the goods. In situations where The space occupied by the regis- possible removal from the list of those goods are delivered to the customer, tered person for their own use is the tax point may not be ex- empowered to audit claims. subject to VAT, if used for the production line or the excise stock purposes of activities not attracting room and may therefore include VAT as provided for under Section 2 KRA Online additional costs such as delivery (c) of the VAT Act. expenses. For a step-by-step guide on how to use Where a registered person occupies the KRA Online service please visit: Excisable value includes all produc- part of the building for purposes of http://www.kra.go.ke/portal/downloads tion expenses except tax related which deduction of input tax is /manuals/KRA-Online-- ones (VAT and cost of Excise prohibited, VAT on the space occu- Services-Step-Guide.pdf. You may also stamps). Transport to the pied will be charged and accounted access the latest software version for customer‛s premises is included for as provided under Section 2 (h). the filing of VAT returns at: except where recoverable. http//www.kra.go.ke/portal The Taxpoint is produced monthly by the Large Taxpayers Office to enhance communication with stakeholders. While measures have been taken to ensure accuracy of the contents, readers are advised to consult with us on any matters touching on tax interpretation. For enquiries and contributions please contact the Operations Office at firstname.lastname@example.org. Please visit our website at www.kra.go.ke/lto.html for more information on our operations.